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Pakistan poised for key role in innovation economy

Faruq Ahmad is a friend of NEDians who recently attended NEDians Convention 2007. He wrote the following piece for San Jose Mercury News, the largest-circulation daily newspaper in Silicon Valley, CA
It's reproduced as follows:

Pakistan poised for key role in the innovation economy

By Faruq Ahmad San Jose Mercury News

Article Launched:09/21/2007 01:36:48 AM PDT

The aisles were crammed, and the booths were jammed. Earnest and intense men (and some women) listened attentively as exhibitors pitched gadgets, software solutions and services, with all the exuberance of Silicon Valley. Monitors flickered, there was garish advertising everywhere, and an occasional TV crew wandered by, interviewing and taping. The energy level was high, a mix of excitement, adrenaline and confidence. This could be Las Vegas or San Francisco. But Karachi, Pakistan?

I was at the Karachi Convention Center, where the 7th annual Information Technology Commerce Network trade show was in full swing last month, with a reported 60,000 in attendance. I had been invited to speak at a daylong CEO forum program organized by the Pakistan Software Export Board that ran concurrently with the trade show. My fellow speakers included Greg Hinkley, CEO of Mentor Graphics, who announced that his development team from Lahore, Pakistan, would be filing its first patent.

Some of those attending paid an extra $250 to hear venture capitalists from the United States talk about entrepreneurship, and how they could make it big in the innovation economy. The room was full.

But Pakistan, you say with unease - isn't travel there especially risky? Well, not for almost a dozen invited Americans who mingled freely with the locals, in what is just another bustling South Asian city. While I would not attempt to underplay travel risks for visitors, it was equally clear that here in the United States, our anxieties are far too easily stoked, and there is a lot to be said for replacing fear with facts.

Pakistan is an ethnically similar, smaller neighbor to India. Could its recent rapid 7 percent-plus growth rate turn it into the next innovation-economy player in the region? Its economic vitality in recent years is consistent with the 800 percent increase in its stock market. A key step is to build a bridge to Silicon Valley, and the country is rapidly stepping up its links. The South Asian networking group the Indus Entrepreneurs (www.tie.org) already has offices in Karachi and Lahore, and OPEN (www.opensiliconvalley.com) is following suit.

India and Pakistan are better viewed as companions, rather than competitors. India is bursting at the seams, and for some types of projects, Pakistan could be the better choice, to everyone's benefit. Hinkley, for example, said his company picked Pakistan for its development team because of workforce quality, lower costs and lower turnover.

As opportunities grow, experienced Pakistanis from abroad are returning to positions of responsibility. I was pleasantly surprised to find bureaucrats with backgrounds that were anything but bureaucratic. Yusuf Hussain, director of the software export board, is a graduate of Rice, Cornell and the University of Texas, and has been an executive at Time Warner and MCI. His team includes Aon Rana, who cut his teeth in senior marketing roles at Orange business services in the United Kingdom.

In my field of expertise, venture capital, Pakistan's success is particularly hard to predict. My investment experience includes India and China, and I saw how long it took these countries to get to critical mass as attractive investment destinations for U.S. institutional investors. Pakistan is assembling a $50 million fund to help kick-start venture capital support for local companies. How the government structures and selects managers for this fund will determine whether future funds attract institutional investors and sponsorship support from top Silicon Valley firms, assuming attractive deal flow.

Done right, this first fund could help lay out a road map for venture capital that moves Pakistan forward in the global innovation economy. Pakistan may be late to the party, but it seems to have finally found the directions.

What of all the political turmoil that appears to taint Pakistan? As one seasoned Indian-American veteran of Silicon Valley pointed out to me, it is an entrepreneur's job to turn handicap into opportunity. Start-ups never have enough capital, or the right people, or the revenue momentum or brand presence. In Pakistan, add political stability to the list. So long as it does not turn into a show-stopper, it is just another challenge to work around. Judging from my visit, Pakistanis certainly seem to be gearing up to the task.

FARUQ AHMAD, founding partner of Palo Alto Capital Advisors, was born in Pakistan. He received engineering degrees from MIT and Stanford, and an MBA from Stanford. He wrote this article for the Mercury News.

Comment by Riaz Haq on July 3, 2011 at 10:50am: Pakistan is ranked in 4th place on CII-Insead's Global innovation efficiency sub-index, 5 places ahead of India in 9th place, according to Economic Times of India:

India has improved its ranking in the global Innovation Efficiency Index to 9th position in 2011 from 101th last year on factors like political stability, R&D, market and business sophistication, according to a study.

Surprisingly, Pakistan was placed ahead of India at 4th position, the CII-INSEAD study said.

However, India has slipped on its ranking in the Global Innovation Index to 62nd position out of 125 countries in 2011 from 56th last year while Switzerland was at the top,

It said that a lot of Indian talent is returning home to the country and the youth in urban India are now more global than ever, "and they are quite in tune with new technologies, even ahead of the curve in many cases, as early adapters".

"Multinational corporations are making large investments in R&D outside of their headquarter countries, setting up R&D sites in low-cost emerging countries such as China and India to access global talent and take advantage of their proximity to target markets," the report said.

Indian major players such as Tata, Godrej, and Mahindras are shifting their focus towards the rapidly expanding middle-income group of customers by coming up with frugal innovations, keeping in mind the price sensitivity of Indian consumers, it said.

http://economictimes.indiatimes.com/news/economy/indicators/india-m...

http://www.globalinnovationindex.org/gii/GII%20COMPLETE_PRINTWEB.pdf

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